This week's New Jersey Legal Update podcast will discuss the important local bankruptcy rule amendments for condominium associations and secured creditors.
This week's New Jersey Legal Update is presented by Thomas Onder a member of the Firm's Bankruptcy & Creditor's Rights group.
You can download the New Jersey Legal Update Podcast # 40 here. (8 MB)
Technorati Tags: New Jersey : Podcast : Bankruptcy
Jason Storipan, a member of the Employment group at Stark & Stark, will be a speaker at ICLE's Civil Motion Practice. The seminar is focused on improving lawyers' ability to prepare, select, and time motions to give clients the competitive edge. The seminar will be held on Thursday, September 28, 2006 at Mayfair Farms in West Orange, New Jersey.
In a recent decision in the Superior Court of New Jersey, Chancery Division, Bergen County (In the Matter of the Estate of Louis Spadaccini, Deceased), the Honorable Peter E. Doyne, reviewed the current case law dealing with "lack of testamentary capacity " and "undue influence" in probate litigation and will contests.
On the issue of whether an individual has the "testamentary capacity" to execute a will, Judge Doyne noted that the mental capacity of a testator is to be tested as of the time of the execution of the will. Gellert v. Livingston, 5 N.J. 65 (1950). The test of whether an individual has the necessary testamentary capacity to execute a will centers around whether the testator was able to comprehend and understand: the property he was about to dispose; the natural objects of his bounty; the meaning of the business in which he is engaged; the relation of each of these factors to the other and the manner of distribution that is set forth in the will. See, In re Will of Landsman, N.J. Super. 252, 267 (App.Div. 1999).
In addition to what the party claiming a lack of testamentary capacity must prove, the contestant usually has the burden of proving that there was a lack of capacity by clear and convincing evidence, In re Coffin's Estate, 103 N.J. Super. 1 (App. Div. 1968), as it is presumed that the testator was of sound mind and competent when a will is executed. Haynes v. First National State Bank, 87 N.J. 163, 175-176 (1981).
On the issue of "undue influence", Judge Doyne, citing the Haynes case, noted that undue influence is the "mental, moral or physical" exertion which destroys the "free agency of the testator" by preventing him "from following the dictates of his own mind and will and accepting instead the domination and influence of another." As in the case of testamentary capacity, the burden of proving undue influence falls upon the party claiming that there was undue influence.
However, of particular significance is the fact that the burden of proof will switch if it can be shown that a confidential relationship existed between the testator and beneficiary and suspicious circumstances are present.
These basic concepts and points of law are relevant to almost every will contest. Unfortunately, probate litigation usually involves fights among family members where the relationship has deteriorated over the years. When a loved one dies, some family members will have remained close with the decedent, and the relationship with others will have faded. Whatever the relationship, questions as to the disposition of a loved one's assets often present issues of capacity and undue influence.
Technorati Tags: New Jersey : Probate Litigation : Will Contests
In a recent study conducted by Cornell Professor David Sherwyn, he presented a case study of a large employer following implementation of a program of alternative dispute resolution. He concluded that there did not appear to be discernable bias either in favor of employees or employers in terms of the results of arbitration of employment discrimination claims. Cases were resolved in under two weeks, on average, rather than one year or more as is typical in matters which proceed to court. The costs on all sides were considerably less and where the parties were not otherwise able to work out disputes on their own, arbitration appeared to be a generally more favorable alternative to litigation.
Technorati Tags: New Jersey : Alternative Dispute Resolution : ADR
On February 21, 2006, the Law Division decided Riya Finnegan, LLC v. Twp. Council of South Brunswick, which has been approved for publication (but has not yet been given a book and page in the official reporter). In this case, Township Council amended its zoning ordinance to prohibit retail uses on a specific piece of property in direct response to objections raised by area residents over an application to construct a mixed-use retail and office complex on the subject property. This zoning change was completely inconsistent with the Township Master Plan for the area where the subject property was located and, as such, in order for the zoning change to be valid under the Municipal Land Use Law, N.J.S.A. 40:55D-1, et. seq., Township Council was required to pass the zoning change by a majority of its full authorized membership and set forth by resolution a statement of reasons for the proposed inconsistency. Although Township Council produced a statement of reasons to support the proposed change in the permitted uses for the subject property, Township Council based its decision exclusively on lay testimony from residents and unsupported planning-related conclusions from the Township Planner. The Court found that this was “insufficient” and concluded that action taken by Township Council in adopting the zoning amendment was “arbitrary and unreasonable and is void ab initio.” In addition, although not necessary to the decision, the Court also invalidated the zoning amendment on grounds that it constituted inverse spot zoning.
A new proposal working its way through the Legislature would protect by statute an additional source of revenue for many condominium associations in New Jersey. Without much media attention or fanfare, Bill A-2822 was introduced in the New Jersey Assembly on March 9, 2006, sponsored by Assemblymen Frederick Scalera (D - Nutley) and Peter J. Biondi (R - Somerville). This legislation would permit a condominium association – if authorized by its master deed or by-laws – to levy and collect a capital contribution, membership fee or other charge upon the sale or transfer of a unit for the purpose of defraying the association’s common expenses.
This bill would also settle the disputes caused by the Appellate Division’s decision in Micheve, L.L.C. v. Wyndham Place at Freehold Condo. Ass’n, 381 N.J. Super. 148 (App. Div. 2005), as discussed in a previous blog. Decided in October 2005, Micheve invalidated a condominium working capital contribution authorized solely by the condominium’s board-enacted resolution. The Court found that such a resolution could not be enforced because it violated the provisions of the New Jersey Condominium Act requiring common expenses to be charged to all unit owners based on their proportionate interests in the common elements. Additionally, the Court’s decision called into question the validity of collecting such a capital contribution or membership fee – even if authorized by an association’s master deed or by-laws – suggesting that such a charge may also be violative of the Condominium Act.
Bill A-2822 – as proposed – would amend the Condominium Act, N.J.S.A. 46:8B-15(e), to address the Court’s concerns in Micheve, and specifically allow for an association to collect such a fee if authorized by its master deed or by-laws. The proposed language of the Bill states “[i]f authorized by the master deed or bylaws, the association may levy and collect a capital contribution, membership fee or other charge upon the initial sale or subsequent resale of a unit, for the purpose of defraying common expenses, or otherwise provided that such charge shall not exceed 18 times the amount of the most recent monthly common expense assessment for that unit.” After coming out of the Assembly’s Housing and Local Government Committee, this version of Bill A-2822 was overwhelmingly passed by the Assembly on June 22, 2006, by a vote of 68-5, and then promptly referred to the Senate Community and Urban Affairs Committee. It is expected to be voted on by the Senate and may end up before the Governor within the coming months.
While this legislation would not provide any greater rights to condominium associations that currently charge capital contributions or membership fees pursuant to their master deed and by-laws, it would specifically authorize by statute the issue left undecided by Micheve – namely whether capital contributions in general violate the Condominium Act. Moreover, the legislation would authorize condominium associations who do not have such provisions in their master deed and by-laws to validly enact such amendments requiring new buyers to pay certain capital contributions and membership fees upon the purchase of their units. Finally, this Bill would reenforce the Court’s decision in Micheve making it illegal for condominium associations to collect capital contributions enacted solely by Resolution.
Stark & Stark will continue to monitor this significant legislation and provide timely updates as to its progress. If you would like to discuss the contents of this blog or how it affects your association in more detail, please contact one of the attorneys in Stark & Stark’s Community Associations Group.
Technorati Tags: New Jersey : Community Association : Capital ContributionsThomas Giachetti, Chair of the Securities Practice group, has also become a columnist for Investment Advisor magazine. The column, Expert's Corner, will be appear monthly beginning with the July 2006 issue.
Read the July column here.
This week's New Jersey Legal Update podcast will discuss the redevelopment process in New Jersey as it pertains to property owners who are interested in redeveloping their own property. The podcast will address New Jersey's redevelopment process, starting from a municipalities initial designation of a redevelopment area through the adoption of the final redevelopment plan, as well as the issues one would face when attempting to be the redeveloper of their own property.
This week's New Jersey Legal Update is presented by Timothy Duggan and Vincent Mangini, both Shareholders in the firm.
You can download the New Jersey Legal Update Podcast # 39 here. (12 MB)
Be sure to also download the Redevelopment Process Flow Chart here (PDF)
Technorati Tags: New Jersey : Podcast : Redevelopment : Eminent Domain : Condemnation
Like many condominium and homeowners associations in New Jersey, the seventy or so associations in the City of Long Branch were unaware that they were entitled to reimbursement for certain municipal services – such as the costs of snow removal, trash collection and street lighting – that they provided to their members out of their annual budgets. Unaware, that is, until recently... On June 13, 2006, the Long Branch City Council authorized reimbursement of over $100,000 to condominium owners in the City for snow removal and street lighting services. This amount represents the costs of these services incurred by these seventy associations from 1996 through 2006.
Pursuant to the Municipal Services Act, N.J.S.A. 40:67-23.2 to -23.8, every municipality in New Jersey is required to either provide certain services to each qualified private community within its borders or reimburse the community for these services, including the removal of snow, collection of trash or recyclables or lighting of roads and streets. The purpose of the Municipal Services Act is simple – eliminate double taxation of community association residents. As discussed more fully in one of the seminal cases interpreting the Act, Briarglen II Condo. Ass’n, Inc. v. Township of Freehold, 330 N.J. Super. 345, 353 (App. Div. 2000) – litigated by David J. Byrne, Co-Chair of Stark & Stark’s Community Associations Group – the Appellate Division determined that the legislative intent of the Act was to “help eliminate double payment for some services which the residents of qualified private communities now pay through property taxes and fees to their association.”
Although the Municipal Services Act went into effect in January of 1993, many qualified associations fail to take advantage of having their municipality provide these services – or the reimbursement for them – simply because they are unaware that they are entitled to them. This means countless associations in the state – like those formerly unaware in Long Branch – may be entitled to significant reimbursements that could be used to free up other funds for capital reserves, necessary repairs, or long-overdue improvements to their communities.
Technorati Tags: New Jersey : Community Association : Municipal Services Act
On June 16, 2006, The Honorable Peter E. Doyne, P.J.S.C., wrote an interesting and important decision that relates to minority oppression litigation. In Actives International, LLC, et. al. v. Reitz, et. al. the Court addressed the valuation date when dealing with a closely held company. Valuation is one of the most important issues in a minority oppression suit.
The valuation date is important when valuing a business because the value of a closely held company could change over the course of time. In this case, the company’s value decreased over time because it lost a number of significant accounts. In my vast experience representing individuals and businesses in minority oppression claims, I have seen companies become more and less profitable over time. I have seen companies both secure and lose business. If those changes are significant it could effect the value of the company.
Actives International filed a five count complaint with the Superior Court of New Jersey, Chancery Division, Bergen County on July 7, 2005. Shortly after the litigation was filed, the parties’ lawyers agreed in writing to use December 31, 2005, as the valuation date. New Jersey law presumes that the valuation date to be used in a minority oppression claim is the date when the complaint was filed. That presumption may be overcome upon the showing of certain equitable factors. In this case, Actives International lost two significant customers after the filing of the complaint, July 7, 2005. The loss of those two significant customers could reduce the value of the closely held company. Nevertheless, Judge Doyne agreed to enforce the attorneys’ agreement. The Court’s enforcement of the latter valuation date was based upon the failure of the defendants to demonstrate that the plaintiffs’ improper actions caused an artificially low valuation date to be utilized.
This case is instructive to both attorneys (representing clients) and persons involved in minority oppression suits. First and foremost, before a valuation date (other than the date the complaint is filed) is agreed on, you should consider what may happen to the company. You should consider the possibility of obtaining and losing business. Moreover, you should consider the effect of those possible business fluctuations on the ultimate value of the company. In addition, you should also consider the financial future of the company if you are considering commencing minority oppression litigation. Again, Courts will presume that the date the complaint is filed is the applicable date for valuation purposes. If you are aware of the direction of the company it may be prudent to either commence litigation immediately or wait.
Technorati Tags: New Jersey : Litigation : Minority Oppression
Raymond S. Papperman, Chair of the Environmental Law Group of Stark & Stark, will be a speaking at NJICLE's Environmental Risks & Business Solutions on August 14 at the New Jersey Law Center in New Brunswick. The seminar will cover what people need to know about how to use insurance coverage to protect against environmental liability.
Technorati Tags: New Jersey : Environmental
Municipalities in New Jersey are taking action now more than ever to protect their residents – especially their children – Drug-Free School Zones, DNA identification programs for children, criminal background checks for youth athletic league coaches and now “Pedophile-Free Zones”. In May 2005, Hamilton Township, New Jersey passed a “Pedophile-Free Zones” Ordinance that may be the strongest in the nation. The Ordinance prohibits convicted sex offenders from living within 2,500 feet of where children congregate, such as schools, parks and playgrounds. In doing so, Hamilton Township followed the lead of towns and municipalities in over fourteen other states, and potentially many more. Can it be that far off that community associations will employ similar methods to protect its members – especially its youngest and most vulnerable?
In fact, some already have. In Mulligan v. Panther Valley Property Owners Ass’n, 337 N.J. Super. 293 (App. Div. 2001), the New Jersey Appellate Division addressed the issue of whether a condominium association could ban all “Tier 3” offenders – the highest level sex offenders in New Jersey – under “Megan’s Law”, N.J.S.A. 2C:7-8(c)(3). The Trial Court upheld the association’s amendment precluding such individuals from residing withing the community. While the Appellate Division did reject Mulligan’s argument that such a restriction unlawfully infringed on her right to sell or lease her property, ultimately the Court refused to address the validity of this amendment due to an insufficient record. However, the Appellate Division left two issues unanswered – which are now before the New Jersey Supreme Court in Committee for a Better Twin Rivers v. Twin Rivers Homeowners’ Association (discussed recently in several blogs on this site) – namely: (1) whether community associations perform “quasi-municipal” functions and must be considered “quasi-municipalities”; and (2) whether the Court must analyze amendments to associations’ governing documents based on the “business judgment rule” or based on a higher, constitutional standard. Ultimately, the constitutionality of such “Pedophile-Free Zones” in community associations may turn on the Supreme Court’s decision in Twin Rivers.
Critics of “Pedophile-Free Zones” and “Pedophile-Free Associations” argue that such restrictions are unconstitutional, stating that towns and associations are essentially making it impossible for offenders to live legally in most urban communities, which have a multitude of schools, parks and playgrounds. Moreover, once in place, these restrictions may prove expensive and difficult – if not impossible – for a community to enforce. The basis of the restriction is evident – protection and safety. However, does it provide a false sense of security? As critics have pointed out, banning the most serious of sex offenders from owning or living in your community does not preclude a sexual predator from entering your community. Many communities have shared facilities, such as clubhouses, pools and exercise facilities, and other individuals such as maintenance contractors and deliverymen have access to the community and children on a daily basis. Moreover, these concerns over protection and safety may not be strong enough to outweigh the constitutional challenges such restrictions may soon face. Convicted sex offenders – through legislation – lose certain constitutional rights, including the right to vote or the right to bear firearms. Whether these additional restrictions would violate the constitutional rights of an individual to own property as well as other rights remains to be seen.
Technorati Tags: New Jersey : Community Association
Some Domino’s franchisees have asserted that Domino’s has acted unreasonably in forcing its franchisees to purchase an “exorbitantly expensive” point of sale system that is defective and flawed and designed to collect information that Domino’s “misappropriates” for its own use. In Bores, et al. v. Dominos Pizza LLC, No. 05-cv-2498 (D. Minn. 2005), three Domino’s franchisees, owning twenty-five locations between them, have alleged that Domino’s is requiring its franchisees to purchase point-of-sale systems from restricted sources at uncompetitive pricing, through the unfair and unreasonable pricing of the system in order to make a significant profit.
To prove their case, the franchisees have subpoenaed the deposition testimony of Papa John’s corporate representative to obtain information about Papa John’s point-of-sale system. The Louisville, Kentucky based Papa John’s immediately filed a motion in Kentucky federal court to quash the subpoena. Papa John’s motion papers asserted that if forced to provide deposition testimony in a dispute between Domino’s and its franchisees, it would be providing its biggest competitor with trade secrets and other confidential information about its system. Papa John’s further argued that the Domino’s franchisees have not demonstrated any substantial need that would justify compelling Papa John’s from disclosing its point-of-sale processes. At this time, neither Domino’s nor its franchisees have filed opposition papers to this motion.
Technorati Tags: New Jersey : Franchise
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